AU200AUD, Short @ 5'266 (0.01 Lot), Target @ 5'230
...by expecting overlappoing daily candles. and/or at the weeklys' ones, at least partly.
FXcube
...by expecting overlappoing daily candles. and/or at the weeklys' ones, at least partly.
FXcube
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DislikedAU200AUD, Short @ 5'266 (0.01 Lot), Target @ 5'230 ...by expecting overlappoing daily candles. and/or at the weeklys' ones, at least partly. FXcubeIgnored
DislikedAU200AUD, Short @ 5'262 (0.01 Lot), Target @ 5'230 "240" looks also interesting. FXcube Australia200, H4, 2015 December 01 {image}Ignored
DislikedHi Forexcube, Please just wondering if this is for AUD/USD? Many thanksIgnored
Calculating Expected Return
Setting stop-loss and take-profit points is also necessary to calculate expected return. The importance of this calculation cannot be overstated, as it forces traders to think through their trades and rationalize them. As well, it gives them a systematic way to compare various trades and select only the most profitable ones.
This can be calculated using the following formula:
[ (Probability of Gain) x (Take Profit % Gain) ] + [ (Probability of Loss) x (Stop Loss % Loss) ]
The result of this calculation is an expected return for the active trader, who will then measure it against other opportunities to determine which stocks to trade. The probability of gain or loss can be calculated by using historical breakouts and breakdowns from the support or resistance levels; or for experienced traders, by making an educated guess.
The Bottom Line
Traders should always know when they plan to enter or exit a trade before they execute. By using stop losses effectively, a trader can minimize not only losses, but also the number of times a trade is exited needlessly. Make your battle plan ahead of time so you'll already know you've won the war.
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